MTN has made significant progress in its bid to acquire IHS, Africa's largest cellphone tower provider, with several key regulatory approvals now secured. The South Africa's Competition Commission has recommended the deal be approved with conditions. This development brings MTN closer to completing the acquisition, which is expected to be finalized by the end of the year. The deal is worth $2.2bn, or R36bn, and is an all-cash transaction. MTN currently owns a 25% stake in IHS.
In Nigeria, MTN's largest market, the company has secured conditional approvals from the Nigerian Communications Commission and the Federal Competition and Consumer Protection Commission. The Nigerian Communications Commission gave its conditional approval in September, while the Federal Competition and Consumer Protection Commission approved the deal in August. However, the approval comes with the condition that MTN sell up to 30% of IHS's Nigerian business to local investors over time. This condition aims to promote local participation and competition in the market.
The acquisition is expected to result in increased service revenue and core earnings margin expansion for MTN. The company believes that integrating IHS's operations will bring significant synergies, as MTN operates in all of IHS's African markets. IHS derives about 70% of its revenue from MTN, making the two companies closely intertwined. The deal marks a new chapter in the long-running partnership between MTN and IHS, which has been characterized by both cooperation and rivalry.
MTN's chief sustainability and corporate affairs officer, Nompilo Morafo, welcomed the recommendation by the South Africa's Competition Commission. She noted that the proposed transaction had been referred to the country's Competition Tribunal, as is customary for a transaction of this nature. The commission had found that the proposed transaction raises competition and public interest concerns. However, MTN and IHS have offered certain conditions to address these concerns.
In addition to Nigeria and South Africa, MTN has also secured approvals in Zambia. The Common Market for Eastern and Southern Africa and the Zambia Information and Communications Technology Authority have granted their approvals. This comes almost two months after IHS shareholders gave the deal their nod. The approvals mark significant progress in MTN's efforts to secure regulatory clearance across the various markets where the two companies operate.
IHS has recently completed the sale of its Latin American tower operations in Brazil and Colombia, marking its exit from the region. This move aligns with MTN's Africa focus and paves the way for the acquisition. After the deal, IHS will delist from the New York Stock Exchange. The enterprise value of IHS is approximately $6.2bn. The acquisition will see MTN take control of IHS's operations in several African markets.
The deal also marks a significant development in the relationship between MTN and IHS, which has been a long-standing partnership. In August 2024, the two companies announced a renegotiated agreement for MTN's tower leases in Nigeria. The move helped MTN reduce its infrastructure costs in foreign currency. With this new deal in place, IHS and MTN completed the renewal of about 26,000 MTN tenancies on IHS's infrastructure across six African markets.
Key points
- MTN has secured conditional regulatory approvals in Nigeria and South Africa for its $2.2bn acquisition of IHS.
- The acquisition is expected to result in increased service revenue and core earnings margin expansion for MTN.
- The deal marks a new chapter in the long-running partnership between MTN and IHS, which has been characterized by both cooperation and rivalry.
